17.105-1 Uses
Source: FAR 17.105-1 on acquisition.gov
Multi-year contracts are allowed when specific criteria are met, but they are contingent on continued appropriations and may be canceled if future funding is not secured.
Overview
FAR 17.105-1 outlines the conditions under which multi-year contracts may be used by federal agencies. It distinguishes between general civilian agencies and specific requirements for the Department of Defense (DoD), NASA, and the Coast Guard. The regulation sets forth criteria that must be met before entering into a multi-year contract, such as the stability of need, cost savings, and technical feasibility. It also clarifies that multi-year contracts can be used for both supplies and services, and mandates contract cancellation if future funding is not appropriated.
Key Rules
- Civilian Agency Multi-Year Contracts
- Contracting officers (except DoD, NASA, Coast Guard) may use multi-year contracts if the need is firm and ongoing, and if it serves the best interests of the U.S. by promoting competition or efficiency.
- DoD, NASA, Coast Guard Multi-Year Contracts
- Heads of these agencies may use multi-year contracts for supplies if specific criteria are met, including cost savings, stable requirements, stable design, reasonable funding expectations, and realistic cost estimates.
- Scope of Multi-Year Contracting
- Multi-year contracts are permitted for both supplies and services.
- Funding Contingency
- Contracts must be canceled if funds are not appropriated for future years.
Responsibilities
- Contracting Officers: Ensure all criteria are met before awarding multi-year contracts and monitor funding status.
- Contractors: Be aware that contracts may be canceled if future funding is not appropriated.
- Agencies: Make required determinations, document cost savings, and ensure ongoing appropriations.
Practical Implications
- This section enables agencies to plan long-term acquisitions, potentially reducing costs and administrative burden. However, it requires careful planning and documentation to ensure compliance. Contractors should be aware of the risk of contract cancellation due to funding shortfalls, which can impact business planning and resource allocation.
(a) Except for DoD, NASA, and the Coast Guard, the contracting officer may enter into a multi-year contract if the head of the contracting activity determines that-
(1) The need for the supplies or services is reasonably firm and continuing over the period of the contract; and
(2) A multi-year contract will serve the best interests of the United States by encouraging full and open competition or promoting economy in administration, performance, and operation of the agency’s programs.
(b) For DoD, NASA, and the Coast Guard, the head of the agency may enter into a multi-year contract for supplies if-
(1) The use of such a contract will result in significant savings of the total estimated costs of carrying out the program through annual contracts;
(2) The minimum need to be purchased is expected to remain substantially unchanged during the contemplated contract period in terms of production rate, procurement rate, and total quantities;
(3) There is a stable design for the supplies to be acquired, and the technical risks associated with such supplies are not excessive;
(4) There is a reasonable expectation that, throughout the contemplated contract period, the head of the agency will request funding for the contract at a level to avoid contract cancellation; and
(5) The estimates of both the cost of the contract and the cost avoidance through the use of a multi-year contract are realistic.
(c) The multi-year contracting method may be used for the acquisition of supplies or services.
(d) If funds are not appropriated to support the succeeding years’ requirements, the agency must cancel the contract.